The synthesis and size-selective catalytic activity of Pd nanoparticles encapsulated within dendrimers functionalized with different-sized end groups is described. We designed and synthesized a series of fourth-generation poly(amidoamine) dendrimers having various extents of steric crowding on their periphery. This was accomplished by reacting the terminal amine groups of these dendrimers with epoxyalkanes substituted with different-sized alkyl groups. The modified dendrimers were characterized by H-1 NMR, C-13 NMR, and matrix-assisted laser desorption ionization mass spectrometry. Nearly monodisperse (1.7 +/-0.2 nm) Pd nanoparticles were encapsulated within the interior of these dendrimers, and the resulting composite catalysts were used for the hydrogenation of three (alpha-allylic alcohols having different sizes. The results showed a clear correlation between the extent of steric crowding on the dendrimer surface and the turnover frequencies (TOFs) for the substrates: more steric crowding on the dendrimer surface led to lower TOFs.